Markets at crossroads

For a consecutive week, the Sensex managed support at the monthly Fibonacci support level of about 18,220. The recovery was fairly swift towards the end of the week. From a low of 18,256, it scaled a high of 18,568, settling at 18,507, a rise of about 200 points.

The Sensex has not just bounced back from 18,220-odd support levels; it has also turned positive on a monthly basis. Therefore, now, the key support would be at 18,350-odd. As long as the BSE benchmark index sustains above this, the index can rally to 18,750-odd.

The NSE Nifty moved in a range of about 95 points. From a low of 5,548, it rallied to a high of 5,643, ending at 5,627, a gain of 53 points. There seems to be lack of clarity on the Nifty charts. In other words, the index seems at a crossroads, with momentum oscillators equally split in favour of the bulls and the bears.

On the daily charts, the moving average convergence/divergence and the Stochastic Slow are in favour of bulls, while both indicators favour bears on the weekly charts.

The short-term trend is on the verge of turning negative on the daily charts, with the short-term (20-day daily moving average) on the verge of slipping below the medium-term (50-day daily moving average). The moving average scenario remains comfortably in favour of the bulls.

One can expect high volatility in the holiday-shortened derivatives expiry week. The markets would be shut on Wednesday, on the occasion of Guru Nanak Jayanti.

The trading range for the Nifty seems to be 5,565-5,685. However, given the expectations of high volatility, it would be advisable to avoid shorting above 5,685-odd levels and buying below levels of about 5,565.